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BNP Paribas AM launches social bond fund

News Team, 25/11/2021

BNP Paribas Asset Management (BNPP AM) today launched the BNP Paribas Social Bond fund, investing in bonds aimed at financing projects with positive social impacts. 

The fund is classified as Article 9 under SFDR and launches during a period of record growth for the sustainable bond market, in particular social bonds.

Managed using a proprietary methodology, bond and issuer selection are aligned with BNPP AM's sustainable investment standards, drawing on the expertise of its bond management teams and its Sustainability Centre. The fund combines BNPP AM’s expertise in green bonds and its in-depth knowledge of social issues.

BNP Paribas Social Bond fund invests in three main areas. Firstly, a minimum of 75 percent in bonds labelled social or sustainable, promoting access to essential services such as water or health, affordable housing, employment, food security, socioeconomic progress or basic infrastructure.

Secondly, a maximum of 25 percent in bonds issued by socially responsible companies, selected according to a rating model developed by BNPP AM that assigns an ‘inclusion score’ to issuers, ranking them on their social practices aimed at reducing inequalities.

Finally, a maximum of 10 percent in microcredit instruments that help provide small businesses and individuals in emerging markets with access to financial services.

According to the firm, social bonds are the fastest growing segment of the sustainable bond universe, accounting for 30 percent of total green, social and sustainability bonds in 2020. This growth is expected continue, driven in large part by sovereign or quasi-sovereign issuers and by the expansion of social bond programmes to finance more projects aimed at countering inequalities.

Arnaud-Guilhem Lamy, manager of BNP Paribas Social Bond fund, said: "The growing importance of bonds within thematic management, historically more geared towards equities, and the emergence of social considerations among investors are two major developments in our industry. The launch of BNP Paribas Social Bond fund reflects both of these, and enables capital to be directed towards activities with a positive social impact, such as unemployment benefit programmes or social housing. Our rigorous methodology brings real added value, by evaluating not only the quality of the issuer but also that of the projects being financed."

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